Monday, 12 October 2009

iXBRL - Don't Panic

Companies in the UK will have to submit financials to Her Majesty’s Revenue and Customs (HMRC) via an online process within the next 2 years. I had a session with Ernst & Young about the language to be used called XBRL. I have also attended a workshop at HMRC titled “Company Tax Returns and Online Filing”. This is a summary of my findings and my personal views on the impact.

XBRL stands for eXtensible Business Reporting Language. It is one of a family of "XML" languages which is becoming a standard means of communicating information between businesses and on the internet.(1). iXBRL is a slight derivative of this language which stands for InLine eXtensible Business Reporting Language and allows the data to be read by computers and viewed by humans all from the same file.

The Companies House and HMRC issued a joint statement on 1st September 2009 stating that they are working together and that both their filing services are being aligned so that a single point of filing can be used.

As with any technology solution we will find many ways of solving this challenge ranging from ERP Supplier based solutions right through to stand-alone file converters. Unfortunately iXBRL is not yet widely used so I have not yet managed to find anything worth taking a look at yet. HMRC is busy reviewing a number of products and certifying them but when pushed they did not want to yield any names or costs just in case they were seen to favour one supplier over another. They did assure us that a number of suppliers would be ready for market in Q1 of 2010.

Here is a list of companies who I believe are working on a solution. Do not take this as gospel, just through my googling.

Awareness of XBRL and its impact is at an acceptable level within the UK market. Based on the Q&A session with HMRC the first 2 years are really going to be a phased/teething process and companies will not be penalised or prosecuted if they don’t get it quite right. We also do not have any products to work with as they are still being developed.

I would suggest a measured approach to the online filing which starts with Finance obtaining the taxonomies that they intend to use for filing and to start manually mapping the figures across from the financials. This in my opinion is going to be the largest portion of the work required. A deadline of the mapping tables by end Q2 2010 should be achievable.

Get your IT Department to keep tabs on the development of the various alternatives in the software space and then organize demonstrations and evaluations as and when possible. I estimate that we should be able to find something by Q2 2010. Based on all the input I would at this point suggest that we look to purchasing an Office Add-In that will allow you to continue with our current method of producing the financials and thus reduce impact on the business.

1 comment:

Great article Paul, really clear explanations within. Would like to add our name to the list of companies providing solutions, so far we've provided solutions for major charities, some of the UK's biggest banks and a software as a service for other software providers. Our strengths are in the Excel to iXBRL and Word to iXBRL spaces. Please check out http://www.arkksolutions.com/ixbrl.html to find out more